To transfer information between two systems, i.e., a customer system and a financial market (exchange) system, that utilize different protocols or languages, it is necessary to manually extract the raw data from the one system and manually enter that data into the other system. Trading interface systems implemented by brokerages utilize such a dual system. One system is used to communicate on the client side for receiving transaction information, e.g., orders, and transmitting transaction information, e.g., acknowledgments, confirmations and historical data. The other system is used to communicate on the market (exchange) side to transmit transaction information, e.g., place orders, and to receive transaction information, e.g., acknowledgments and confirmations.
The current methodology or manual system requires duplication of information entry. Currently, customers who wish to trade (buy and/or sell) financial instruments (i.e., securities, stocks, bonds), currencies, commodities, REITs, options, futures, etc., on financial markets (exchanges) must either communicate directly, e.g., by telephone, with a broker to place an order or be connected to a broker electronically, for example, via computer or terminal. Upon receipt of an order the broker must manually enter the order information for transfer to and execution by the relevant financial market (exchange), e.g., NYSE, NASDAQ, TSE, CBOE, etc.
Once an acknowledgment is received from the relevant financial market (exchange), the broker must then either manually reenter that information for transmission to the customer's computer or terminal, or call the customer and indicate that acknowledgment of the order was received from the relevant financial market (exchange). Upon receipt by the broker of a message from the relevant financial market (exchange) confirming execution, partial execution or non-execution of the order, the broker must then once again either manually reenter that information for transmission to the customer's computer or terminal, or call the customer and indicate that the order was either executed, partially executed or not executed by the relevant financial market (exchange).
Additionally, there are currently markets such as the bond market where trading is not implemented electronically, i.e., there are no computer or other systems linking brokers to their clients or to any markets (exchanges). Thus, in these situations all information must be transferred orally and recorded manually both between the customer and broker and between the broker and the market (exchange).
When using a computer or terminal to communicate between a customer system and a broker system when executing transactions in the equities markets (on the equities exchanges), there is a protocol, the Financial Information Exchange (FIX) that has been accepted and implemented by many brokerage houses as a common, standard protocol for all electronic transfers of transaction information. All electronic communications between customers and brokers are formatted according to the FIX protocol.
However, in the equities markets, the various exchanges each utilize proprietary protocols governing communications between the exchange and brokers who are electronically connected to and who transact business on the exchange. For example, the New York Stock Exchange (NYSE) uses the Common Message Switch (CMS) format, while the Toronto Stock Exchange (TSE) uses the Securities Trading Access Message Protocol (STAMP) format.
Thus, any broker wishing to transmit transaction information, e.g., send a customer's order, to an exchange must take the order received from the customer (i.e., in FIX protocol) and reenter it into the broker's system which interfaces with the relevant exchange (using a different protocol), thereby allowing the order to be understood by the exchange's system.
This is a difficult and time consuming process which is prone to errors since the same information must be manually entered by an operator twice for a transaction to be processed.
There is a need for a system and method whereby a broker can receive transaction information from a customer electronically, e.g., via computer or terminal, and transfer that transaction information electronically to a financial market (exchange) without having to manually reenter the transaction information. Additionally, there is a need for a system and method whereby a broker can receive transaction information, e.g., an acknowledgment and/or a confirmation, from a market (exchange) and transfer that transaction information electronically to a customer, e.g., via computer or terminal, without having to manually reenter the transaction information.
Furthermore, there a need for a system and method whereby a broker can automatically translate transaction information received electronically from a customer in a certain protocol or language into a protocol or language compatible with the system used by the market (exchange) to which the transaction information is transmitted, and vice versa.